Disposals Account
jewels.p
Registered Posts: 1,774
Can anyone help.
Vehicle Cost = 8000
Prov.for depn. = 4625
Part Exchange allowance given = 2000
I calculated a loss of £1375. Is this right?
It then asks you to calculate the cost of the replacement vehicle. I dont have a clue?:confused1:
Vehicle Cost = 8000
Prov.for depn. = 4625
Part Exchange allowance given = 2000
I calculated a loss of £1375. Is this right?
It then asks you to calculate the cost of the replacement vehicle. I dont have a clue?:confused1:
0
Comments

Oops just realised it tells you in the Bank Account Summary that 7500 was paid out for a replacement vehicle. Never saw that at first.:blushing:0

The way i calculated it was:
Fixed Asset Cost: 8000
Less: Accumulated Depreciation: (4625)
Net Book Value: 3375
Less: Disposal Proceeds (2000)
Loss on Disposal: 13750 
Can anyone help.
Vehicle Cost = 8000
Prov.for depn. = 4625
Part Exchange allowance given = 2000
I calculated a loss of £1375. Is this right?
It then asks you to calculate the cost of the replacement vehicle. I dont have a clue?:confused1:
DR Disposal a/c £8000
CR vehicle a/c £8000
DR prov for dep a/c £4625
CR disposal a/c £4625
DR vehicle a/c £2000
CR disposal a/c £2000
DR I/S a/c £1375 (loss on disposal)
CR disposal a/c £1375
The balance on the disposal a/c is the profit or loss on disposal (£1375) and the corresponding DE is recorded in the I/S.0 
so that the part exchange total is now
£1500
cost
part exchange £2000// disposal 8000
bank £7500//
bal=========1500
i hope it is correct?0
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